Kimathanka Arun of 454 MW to be built with domestic investment

KATHMANDU: Kimathanka–Arun Hydroelectric Project, the peaking run-of-river scheme of 454 megawatts in Bhotkhola Rural Municipality–2 of Sankhuwasabha district, will be constructed entirely with domestic investment.

Vidyut Utpadan Company Limited (VUCL), a government-promoted entity, has finalized the investment modality for the project.

The project is estimated to cost Rs 97.94 billion. Under the investment modality prepared by VUCL, 70% of the total cost, amounting to Rs 68.55 billion, will be mobilized through loans, while the remaining 30%, or Rs 29.38 billion, will be raised as equity from promoters.

Debt financing is proposed through co-financing arrangements involving the Hydroelectricity Investment and Development Company Limited (HIDCL), Employees Provident Fund, Citizen Investment Trust, Social Security Fund, insurance companies, and banks and financial institutions. Likewise, the company plans to raise equity from its promoters as well as through public share issuance targeting non-resident Nepalis, Nepalis employed abroad, residents of project-affected districts, members of marginalized families, and the general public.

VUCL has so far spent Rs 731.4 million on studies and pre-construction works. Land acquisition for the project office and staff camp has been completed, while the company has earmarked Rs 450 million to pay compensation for land required for the dam, reservoir, and powerhouse.

Upon completion, the project is estimated to generate annual revenue of Rs 16.91 billion.

Earlier, the energy ministry finalised the investment modality for the Upper Arun (1,063 MW) hydropower project—the uppermost project in the Arun River corridor. The World Bank and the Asian Development Bank had initially shown interest in financing the project. However, they later withdrew, forcing the government to prepare a new modality to invest in the project with domestic capital.

Kimathanka Arun sits below Upper Arun and above Arun-3 (900 MW), Lower Arun (679 MW) and Arun-4 (695 MW).

Arun-3, Lower Arun, and Arun-4 are being developed jointly by the Indian government undertaking SJVN and the Nepal Electricity Authority.